26 U.S.C. § 7612 — Special procedures for summonses for computer software

(a) General rule. Normally, the Secretary^* may not issue a summons under this title, or begin an action under section 7604 to enforce a summons, to produce or analyze tax-related computer software source code. Subsection (b) provides exceptions. Software and related materials provided to the Secretary under this title must be protected by subsection (c).

(b) When source code may be provided.

(1) The general rule in subsection (a)(1) does not apply to a portion, item, or component of tax-related computer software source code if the Secretary cannot reasonably determine the correctness of a return item from the taxpayer’s books, papers, records, or other data, or from the related executable code and associated data; the Secretary identifies with reasonable specificity the source-code portion needed to verify the item; and the Secretary decides that this need outweighs the risks of unauthorized disclosure of trade secrets.

(2) The general rule also does not apply to an inquiry into an offense connected with administering or enforcing the internal revenue laws; source code acquired or developed mainly for the taxpayer’s or a related person’s internal use rather than commercial distribution; communications between the source-code owner and the taxpayer^* or related persons; or source code that another provision of this title requires to be provided or made available.

(3) For paragraph (1), the Secretary is treated as meeting the requirements in subparagraphs (A) and (B) if the Secretary decides it is not feasible to determine the item’s correctness without the related executable code and associated data, formally asks the taxpayer for that executable code and associated data and asks the owner of the source code for the executable code, and the requested code and data are not provided within 180 days after the request.

(4) In a proceeding under section 7604 to enforce a summons issued under this subsection, the court must hold a hearing, at the request of any party, to decide whether this subsection’s requirements were met.

(c) Safeguards.

(1) In a court proceeding to enforce a summons for software, the court may receive evidence and issue orders needed to prevent disclosure of trade secrets or other confidential information, including placing information under seal to be opened only as the court directs.

(2) If software comes into the Secretary’s possession or control during an examination of a taxpayer, the software may be used only for examining that taxpayer’s return, the taxpayer’s appeal to the Internal Revenue Service Independent Office of Appeals, a judicial proceeding and its appeals, or an inquiry into an offense connected with administering or enforcing the internal revenue laws. Beforehand, the Secretary must give the taxpayer and owner a written list of everyone who will analyze or otherwise access the software. The software must be kept in a secure area or place. Source code may not leave the owner’s business premises unless the owner permits it or a court orders it. The software may be copied only as needed for analysis; the Secretary must number every copy and certify in writing that no other copies have been or will be made. At the end of the permitted-use period, the software and all copies must be returned to the person from whom they were obtained, and copies on a machine’s hard drive or other mass-storage device must be permanently deleted. The Secretary must obtain from each person who analyzed or otherwise accessed the software a written certification, under penalty of perjury, that all copies and related materials have been returned and that no copies were made of them. The software may not be decompiled or disassembled. The Secretary must give the taxpayer and each owner of an interest in the software a written agreement between the Secretary and each non-Federal officer or employee^* who will analyze or access it. That person must agree not to disclose the software except to people to whom it could be disclosed for tax-administration purposes under section 6103, and not to participate for two years in developing software intended for a similar purpose. The software is return information for section 6103. For source-code analysis that must occur at the owner’s premises, the owner must make necessary equipment or materials available. Each owner of an interest in the software is a party to the agreement.

(d) Definitions. “Software” includes computer software source code and executable code. “Computer software source code” means code written by a programmer in a programming language comprehensible to appropriately trained people and not capable of being directly used to instruct a computer, plus related programmers’ notes, design documents, memoranda, similar documentation, and customer communications. “Computer software executable code” means object code, machine code, or other computer-readable code used directly by a computer to execute instructions, plus related user manuals. “Owner” includes the developer. A person is “related” to another person if they are related persons under section 267 or 707(b). “Tax-related computer software source code” means source code for a computer program intended for accounting, tax-return preparation or compliance, or tax planning.